3 Jun

In late June 2003, the House and Senate passed separate bills addressing the longstanding void that has existed since Medicare’s inception in the 1960s regarding the provision of outpatient medications. Although the bills differed, some major features are the same; only the exact amount and percentage of coverage must be worked out in committee.

The plans would pay for 50% to 80% of drug costs after enrollees pay a deductible of $250 to $275. After a total of $2,000 to $4,500 has been spent for medications, enrollees would pay for all prescription drugs until they reached the “true” out-of-pocket maximum of $3,500 to $3,700, referred to as the “donut hole”—the void in coverage at which point enrollees must pay 100% of the pharmacy costs. After this point has been reached, the plan would cover 90% to 100% of expenses. kamagra jelly uk

The prescription drug cost-sharing and premiums are reduced or eliminated for certain low-income beneficiaries. Depending on the premiums and cost-sharing, the break-even point (the point at which the amount that enrollees pay for in cost-sharing and premiums is equal to what they would have paid without any drug coverage) is between $775 and $1,155 in total annual drug spending for beneficiaries who do not meet the low-income assistance levels.

In addition to these cost-sharing and coverage levels, each bill provides for this benefit to be managed by private PBMs that use formularies and other utilization-management tools to control costs and optimize outcomes. This $40 billion-a-year program has tremendous implications not only for the beneficiaries but also for those plans and professionals that choose to manage this risk.



Prospective Payment System

A similar paradigm shift occurred in skilled nursing facilities on July 1, 1998. These facilities, delivering Medicare-reimbursed post-acute services, began operating under a prospective payment system (PPS) using the Resource Utilization Group (RUG-III) to calculate payments. This was a major change for those facilities that had previously been paid on the basis of “average costs” and that had not been responsible for medication costs. Under the new system, each resident falls into one of 44 specified RUGs with a prospectively calculated reimbursement. With this shift, one problem is that although nursing-home operators are held accountable for pharmaceutical costs, they are not directly responsible for prescribing these medications; however, they can assist in the process through their P&T committees.
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Skilled nursing facility providers have responded to the PPS in several ways. The Office of Inspector General (OIG) has found that skilled nursing facilities have:

1.  increased scrutiny of patients’ health status related to admissions.

2.  placed renewed emphasis on utilization management after patients have been admitted.

3.  developed preferential admissions policies for patients for whom they believe the PPS rate is adequate or better.

4.  improved internal utilization monitoring and documentation processes.

In a study on optimizing medication use in skilled nursing facilities, we concluded that such optimization was possible only by establishing formulary drugs, algorithms, and eliminating inappropriate drugs as effective strategies. This focus is possible only with the active participation of P&T committees.

New York State Medicaid Nursing-Home Program

Besides the major shift in financial responsibility of the Medicare pharmacy benefit from older adults to PBMs and others, additional movements promise to continue this trend and to transfer the financial burden from the government and other payers to provider groups. For example, in all states except New York, the financial risk for medications belongs to the state Medicaid program. New York is the first state to shift this risk to the nursing facility for Medicaid residents in a manner similar to the way in which the federal government, through Medicare, has shifted financial responsibility to skilled nursing facilities. In New York, most drugs are lumped into the Medicaid daily rate for the nursing facility. As a result, the nursing-facility provider is liable for the Medicaid residents’ medication costs. Medicaid typically reimburses institutional pharmacy providers according to the average wholesale price (AWP) plus a dispensing fee. As a result of this payment system, all states (except New York) find that their nursing facilities have no economic incentive to control drug usage; in fact, pharmacy providers benefit when a greater number of medications are prescribed. New York nursing facilities are forced to rely heavily on their P&T committees to optimize their medication management.


One important initiative—because of the tremendous acceptance it is acquiring at the Centers for Medicare and Medicaid Services (CMS)—is the Program of All-inclusive Care for the Elderly (PACE). PACE is based on the belief that it is better for the well-being of older people with chronic care needs and their families to be cared for in the community whenever possible. PACE serves individuals who are 55 or older and who are certified by their state as needing nursing-home care, as being able to live safely in the community at the time of enrollment, and as being able to live in an area served by PACE. When a PACE participant needs nursing-home care, the program pays for it and continues to coordinate care. Only 7% of PACE participants reside in nursing homes annually.

PACE receives a lump payment from Medicare and Medicaid for delivering all needed medical and supportive services. Outcomes from these programs have been positive in consumer satisfaction, reduced institutional care, controlled use of medical services, and cost savings to public and private payers of care, including Medicare and Medicaid. These positive outcomes are the direct result of the active participation of pharmacists as part of the interdisciplinary team. One study that examined PACE concluded that consultant pharmacists can ensure that appropriate medication changes are made.


Bootman and colleagues estimated that pharmacy review might save $3.6 billion each year for nursing-home patients and noted the importance of active pharmacy review. Although pharmacy consultants play a vital role in this process, there is concern about the pressure to produce positive financial results. In a position paper, the American Society of Consultant Pharmacists stated its belief that the PPS system promotes dramatic alterations in drug utilization and drug choice, and because these are not currently tied to outcomes, no safeguards exist to prevent inappropriate medication usage. Despite this belief, clinical pharmacists who provide pharmaceutical care for elderly primary care patients can reduce inappropriate prescribing, and possibly ADRs, without negatively affecting health-related quality of life. buy generic levitra

The result of the changing demographics and the expansion of pharmacy benefits can produce either the perfect storm or an opportunity to improve health outcomes for elderly adults; either way, the role of P&T committees and their members will continue to grow. Perhaps, in this expanded role, P&T committees will do what they do best—optimize the result for all parties through active team involvement.